On behalf of the Board of Directors, I am pleased to present the Annual Report and Financial Statements for the year ended 30 June 2010. The year has been one of mixed fortunes for the Group’s business sectors, as some industries continue to struggle with poor global demand while others experienced signs of market recovery, especially in the last quarter.

Business Highlights

A recovery in demand from Malaysia’s steel and construction industries spelt good news for the Group’s limestone processing and scrap metal trading businesses. The limestone processing business, conducted by our subsidiary, Compact Energy Sdn Bhd ('Compact'), weathered the slowdown in demand experienced throughout the last financial year, and ended the current year with a healthy growth in revenue and profit. Having put on hold the Phase 2 expansion of our limestone processing plant due to the poor economic climate, construction has now re-commenced and is expected to be completed by mid-2011. Expanding the potential of this business further, Compact has invested in a hydrated lime production plant, which product is essential to a range of industries including water treatment and mining. The new plant is currently under construction and is targeted to be operational by early 2011. Our scrap metal trading business, operated by LAP Trading and Marketing Pte Ltd ('LAP Trading'), also fared better this year, effectively doubling its sales and profit compared to last year. Our electronics business, operated by AE Technol Pte Ltd ('AE') (formerly known as Advent Electronics Pte Ltd), faced another bleak year as the slowdown in the electronic industry that took hold last year showed no signs of abating. Although AE downsized, ceasing operations in component distribution to focus on the higher profit margin area of turnkey project management, its efforts achieved little result with no new sales secured and continued contraction in revenue.

Financial Highlights

Group turnover for the year ended 30 June 2010 dropped by 29% from S$62.0 million to S$43.8 million. This is mainly attributable to the sharp decline in revenue from our electronics business, while both Compact and LAP Trading reported an increase in profits as compared to last year. The Group ended the financial year with net earnings of S$75.1 million, a 21-fold increase over net earnings of S$3.5 million last year. This increase was largely due to a S$75.9 million net gain resulting from the disposal of the entire equity interest in Anhui Jianghuai Automobile Co Ltd ('AJAC'), which was acquired by the Group in 2002, as well as a partial offset by currency translation losses of S$1.8 million. The Group’s overall liquidity position remains healthy. At year end, working capital was S$91.7 million. This was after taking into account the receipt of net proceeds of S$121.6 million generated from the disposal of AJAC, and the payment of a special interim dividend amounting to S$60.8 million, and the acquisition in May 2010 by the Group’s wholly-owned subsidiary, LAP Exploration Pte Ltd, of a 10.3% equity interest in Mindax Limited, an Australia-listed minerals exploration company, to the tune of S$9.3 million. Cash balance as at 30 June 2010 was S$125.3 million, an increase from S$65.9 million in 2009. The accrual of the second interim dividend in the amount of S$40.6 million, which was declared on 30 June 2010 and paid on 29 July 2010, led to trade and other payables increasing from S$5.8 million to S$46.9 million as at 30 June 2010. Meanwhile, trade and other receivables decreased by S$9.9 million to S$13.5 million due to debt collection efforts. As a result of the contraction of our electronics business, there was a 47% drop in employee compensation to S$2.0 million, and a S$2.1 million reduction in inventories due largely to clearance of old stocks.

The Year Ahead

With poor demand severely impacting the performance of our electronics business, AE is now no longer financially viable and the operations have ceased. Our focus moving ahead will be to increase market share for quicklime and to expand downstream into the market for hydrated lime. As always, we continue to explore fresh business opportunities that can generate new revenue streams. Barring any unforeseen circumstances, the Group will strive to build on the growths achieved this year.

Acknowledgement

On behalf of the Board, I would like to express my deepest appreciation to our management and staff for their hard work, commitment and team spirit. My sincere thanks also to our customers, business associates, shareholders and my fellow Directors for your continued support and partnership.

OTHMAN WOK Chairman